IN THE HIGH COURT OF DELHI AT NEW DELHI 
 . 
         ITA 540/2008  
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 COMMISSIONER OF INCOME TAX DELHI CENT I     .... Appellant 
 Through       Mr. R.D. Jolly, Adv. 
 . 
 versus 
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 EROS CITY DEVELOPERS P. LTD.                         ..... Respondent 
 Through       None 
 . 
 CORAM: 
 HON'BLE MR. JUSTICE MADAN B. LOKUR 
 HON'BLE MR. JUSTICE MANMOHAN SINGH 
 . 
 O R D E R 
                  22.05.2008 
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 . 
 . 
 The Revenue is aggrieved by an order dated 22nd December, 2006 passed by 
 the Income Tax Appellate Tribunal, Delhi Bench ?E? in ITA No. 1759/Del/2004 
 relevant for the Assessment Year 2001-2002. 
 The Assessee had earned some interest on FDRs deposited in banks. 
 According to the Revenue, the interest earned was income from other sources 
 inasmuch as the Assessee has not begun its business activities. 
 We  find from a perusal of the Assessment Order that according to the 
 Assessee, it  had  received a licence from  the   Director  Town  and  Country 
 Planning, Haryana on 30th December, 1995 to develop a residential colony known 
 as  Lakewood  City  at  Village  Lakkarpur.  For  the  purpose  of  its 
 ITA 540/2008                                          Page no. 1 of 2 
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 development activities, the Assessee was required to furnish a bank guarantee 
 and for that, the Assessee was required to deposit 25% of the amount as margin 
 money.  It is on this amount that the Assessee earned interest. 
 The Tribunal has noted that the margin money was invested not out of 
 surplus funds but funds borrowed by the Assessee and that the Assessee was 
 following the completed project method of accounting.         On this basis, the 
 Tribunal held that the interest earned by the Assessee was not by way of income 
 from other sources but as a result of its business activities. 
 We are unable to find any fault with the view taken by the Tribunal 
 particularly since the Assessee was granted a licence on 30th December, 1995 and 
 must, therefore, have commenced its business activities at least on that date. 
 No substantial question of law arises in the matter. 
 Dismissed. 
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 MADAN B. LOKUR, J 
 . 
 . 
 MANMOHAN SINGH, J 
 MAY 22, 2008 SD 
 ITA 540/2008                                          Page no. 2 of 2 
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